Template-Type: ReDIF-Paper 1.0
Author-Name: Geoffrey T. Loomer
Author-X-Name-First: Geoffrey T.
Author-X-Name-Last: Loomer
Author-Email: geoffrey.loomer@law.ox.ac.uk
Author-Workplace-Name: Oxford University Centre for Business Taxation
Title: Tax Treaty Abuse: Is Canada responding effectively?
Abstract: This paper explores the means by which tax authorities worldwide
seek to strengthen their tax treaties, through safeguards of varying nature
and scope, in order to identify and prevent what they consider to be abuse
of such treaties. These means of challenge may be grouped under two headings:
purposive approaches to treaty interpretation, particularly with respect to
the terms 'person', 'resident' and 'beneficial ownership'; and broader
responses to unacceptable tax avoidance, specifically reliance on treaty
anti-abuse principles and domestic anti-avoidance rules. The Canadian
response is evinced by two recent cases in which the government unsuccessfully
challenged 'treaty shopping' arrangements, MIL (Investments) SA v Canada
and Prevost Car Inc v Canada. Building on the existing literature regarding
tax treaty shopping and other forms of tax treaty abuse, this work seeks not
only to describe and explain the responses to treaty abuse but to make a
critical inquiry into the essence of such abuse, particularly as it appears
to be viewed by the Canadian revenue authorities. It is argued that the
Canadian response to tax treaty abuse is inadequate, largely because it
conflates multiple approaches and fails to address a key concern: the
existence or lack of genuine economic establishment in the treaty state.
The paper concludes with some suggestions for fashioning a more coherent
and intellectually honest response to tax treaty abuse.
Creation-Date: 2009
File-URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_09/WP0905.pdf
File-Format: Application/pdf
Number: 0905
Handle: RePEc:btx:wpaper:0905